Residents of the US territories received their economic stimulus check weeks after those on the mainland

On September 20, Puerto Rico began its gruesome journey into what came to be the longest blackout in US history. The islands’ fragile energy grid was already ripe for clobbering long before the storm, and the devastation of hurricane Maria’s 155 mph winds and torrential rainfall did just that.

After a painful five months and a failed controversial contract to restore power with Whitefish Energy has passed, the embattled islands have shown signs of some progress towards economic recovery. Last week, Congress approved a much-needed emergency assistance of $2 billion to repair the severely damaged power grid and an additional $9 billion to be directed to recovery and restoration projects in Puerto Rico and the US Virgin Islands. 99% of customers have running water and 84% of the islands have power back.

Then Sunday, the lights and hopes of the Puerto Rican people went out again. An explosion and fire at two power plants blanketed the northern part of the islands with darkness. No one was injured or near the plants during the explosion.

PREPA’s board President Jose Carrion then commented saying, “The same inefficiencies that have dragged the utility for decades remain. Of all the realities that Irma and Maria confronted us with, without a doubt the most evident is that Puerto Rico’s energy system does not work.” Restoring power to the entire island chain thankfully remains the top concern for top officials of PREPA.

Although it was reported that “the majority” of the ones affected by the blackout had their power restored by Monday, it underscores the challenges that the islands have faced and will continue to face with their aging energy grid that has directly prevented the island’s economic recovery.

Without a functional energy grid, besides the obvious light and energy loss to homes and buildings, a major concern is the shut-down of the water and sewage treatment systems, causing bacteria to build up in the water, making it undrinkable. Even today, Puerto Rico civilians are told by authorities to boil all water before drinking.

PREPA is heavily in debt and struggling to patch up a power grid that is nearly three times older than the US industry average and would be the largest restructuring of a public entity in US history. The aid received from Congress to fix the power grid is only 11% of the $18 billion sought for in November and there are fears it will not be enough to solve the problem that directly inhibits Puerto Rico’s road to recovery. The explosion is just one setback that is looming for the crumbled energy grid and unless a cost-effective solution is found, outside investment secured, or aid brought in, Puerto Rico will continue to suffer.

Investments in renewables like solar, wind, etc. could provide a cost-effective solution and improve their energy efficiency and resiliency during unpredictable situations. Microgrids that provide a combination of battery storage and solar energy could cut diesel fuel consumption and provide a more reliable source of energy for isolated communities across the islands.

New Jersey Governor, Phil Murphy recently established the Puerto Rico Relief Commission to fast track the road to recovery for the islands. Investors such as Elon Musk have contributed towards the effort and the Puerto Rico Investment summit held on Monday is sure to bring investors from the ever-growing crypto world. Finally, the new tax plan includes an estimated multi-billion bipartisan provision to bolster economically depressed areas by offering a deferred capital gains tax and significant tax breaks to those willing to invest for a decade in low income areas. This could stimulate tens of millions of dollars to be brought to Puerto Rico by US companies and individual investors looking for real opportunity.

Puerto Rico Governor Ricardo Rosselló announced last month that he would privatize the island’s electrical authority. PREPA has undoubtedly failed the system, and whether Governor Rosselló’s words are carried out, the funds set aside by Congress for the island’s power grid, as little as it may be, will allow the US territory to at least begin rebuilding for a resilient, sustainable, and renewable energy grid until outside capital is brought in or a cost-effective energy solution is discovered.

About The Author

Sean A. Ruditz, born and raised in South Florida, is a recent graduate from Florida Atlantic University with a Bachelor of Science in Economics. During his time as an undergrad, he worked in the financial and real estate industry, conducting financial analysis and investments for different companies. As Ruditz continues his education at FAU, obtaining his Masters of Science in Finance, he will be working towards his true passion of being an economist, conducting research on global economic events and continuing in the financial industry. Ruditz is an Economic Affairs Intern Correspondent for Pasquines.